McCarty: Proposal rights, veto rights, and political bargaining

McCarty. 2000. Proposal rights, veto rights, and political bargaining. AJPS.

In Brief

McCarty recognizes the value of existing bargaining models, but he wishes to formulate a more general bargaining logic, one that can apply to situations other than the stylized presidential-Congressional veto game.

Objective: McCarty's Two Questions

1. How does the allocation of proposal and veto rights affect bargaining situations?
2. Under what conditions are proposal rights more valuable than veto rights (and vice versa)?

How the Literature has Treated McCarty's Two Questions

• Romer-Rosenthal and related models have studied a one-shot, static, take-it-or-leave-it bargaining situation between a proposer and a vetoer. In these models, it is always better to be the proposer. These models have limited utility in answering McCarty's two questions, however, for they examine only a single, rather extreme allocation of rights. What if rights aren't perfectly divided between a single proposer and a single vetoer?
• Veto players arguments (and multidimensional social choice models generally) analyze the ways that veto institutions "change the set of decisive coalitions and, therefore, the set of stable policies." But this literature largely ignores proposal rights and is only beginning to understand variations in veto rights.
• Sequential choice models examine bargaining with an indefinite number of bargaining rounds (not just one round, as in Romer-Rosenthal). This approach is promising but underdeveloped. McCarty locates his article within the sequential choice literature.

Three Lessons McCarty Learned from this Analysis

• First, veto and proposal rights have interacting effects. Whether veto/proposal rights are advantageous depends on the distribution of everybody else's rights. "Formal veto or proposal rights may not translate into real 'power' because proposers strategically work around the most costly coalition partners." Thus, researchers must control for this possibility if they want to isolate the effects of a particular institutional feature.
• Second, the advantages of proposal and veto rights might depend on other institutional factors. For example, the utility of veto rights depends on the bargainers' time horizons. In turn, time horizons might be affected by term lengths, term limits, presidentialism, and nomination procedures.
• Third, we cannot predict what institutions a set of constitutionally designers will prefer merely by examining their preferences. Those designing a nation's constitutions could generate "almost any expected political outcome" by tinkering with veto rights, proposal rights, or both. Thus, the designers' political interests do not enable us to predict the institutions that they will favor.

The Details of the Model

In brief: A proposer gets to divide a dollar. She will typically design a proposal that will create a winning coalition just large enough to override the vetoes of those outside the coalition. Since the other players vary in their veto rights, the numerical size of this coalition may vary.

Key Concepts

• Proposal rights are determined not only by institutions, but also by norms, rules, resource constraints, and collective action problems. Each member of the assembly (i) has probability pi of being able to make a proposal in any given period of bargaining.
• Veto rights are also determined by institutions, norms, and rules.
  • Individual veto rights represent the number of opposing votes needed to override my veto. If I am a member of the Senate, it takes 50 "yeas" to override my "nay." If I am the president, it takes two-thirds of both houses to override my "nay." Each member's veto rights are indicated by ki.
  • Collective veto rights must be exercised by a group. When viewed this way, Congressional passage of legislation requires a majority (or super-majority) of two groups (House and Senate) to collectively agree not to veto (i.e. to pass) a proposal.
• Each player's type is given by {pi, ki}. Players of the same type are treated identically.
• Continuation utility (vi): The value to each player of playing another round of the game. This is endogenous. The intuition: Given the allocation of proposal and veto rights, how much (discounted) utility do I expect to garner from future rounds of this game?
  • Each member's best response to a given proposal: Accept any proposal (x) if my share of it (xi) will give me more utility than I can expect to receive from continued play, i.e. xi ≥ δvi. ("δ" means "discounted").
• Stationarity: Each round is unaffected by earlier play; the game begins anew each period.

Findings

1. Effects of Asymmetric Veto Rights (but equal, hence irrelevant, proposal rights):
   • Veto rights generally are helpful, unless players with identical veto rights must compete for inclusion in a single winning coalition (in which case their advantage disappears).
     • If you have lots of veto rights, you are likely to be in every winning coalition.
   • Collective veto rights lose their usefulness as the size of the collective grows.
   • Time horizons matter. Your veto is only useful if you have the patience to use it.
2. Effects of Asymmetric Proposal Rights (but equal, hence irrelevant, veto rights):
   • Only the proposer has any chance of getting more than δvi (since the proposer offers exactly δvi to everyone else). But proposal rights only benefit you if your probability of being the proposer is high.
   • Proposal rights benefit you the most when other players have short time horizons.
3. Interaction of Veto and Proposal Rights:
   • Increased proposal rights usually magnify the effects of veto rights (and vice versa)
   • But when the distribution of proposal rights is extreme, veto rights cease to matter.
4. Concurrent Supermajorities (e.g. bicameral bargaining):
   • The group that needs the largest majority (i.e. the Senate) will be advantaged.

Comments and Criticism

• Though I admire McCarty's attempt to create a truly comparative, broadly applicable theory, I fear we've lost more than clarity in doing so: McCarty's attempt to make the theory broader seems to make it less descriptive of presidential-Congressional bargaining.
• I'm not sure I can read this model and tell you whether to expect the president to use his veto--something that other papers we've read this week can do.
• McCarty wants his theory to explain bicameral negotiations, presidential-Congressional bargaining, labor-management disputes, UN Security Council negotiations, and everything else. But by watering the discussion down to such broad concepts (in order to explain everything), has McCarty sacrificed the ability to explain anything